The UK Financial Conduct Authority (FCA) has imposed a monetary penalty of £7.38m against insurance retailer Swinton Group, for mis-selling of monthly add-on insurance products encompassing home emergencies, personal accidents and motor breakdowns.
The UK market watchdog has also ordered the insurance retailer, which wrongly marketed the products between April 2010 and April 2012, to compensate up to £11.2m to more than 650,000 affected customers.
Swinton’s aggressive sales strategy treated customers unfairly and failed to provide sufficient information to customers about the key terms of the policies, during the telephone sales of monthly add-on insurance policies. It sold policies worth £92.9m.
FCA enforcement and financial crime director Tracey McDermott said, "Swinton failed its customers. When selling monthly add-on policies, Swinton did not place the consumer at the heart of its business. Instead it prioritised profit."
Since enough information pertaining to the terms of the policy, such as the conditions and limitations, and cancellation process were not dictated to the customers, hence there is possibility that every sale could have been a mis-sale, claims FCA.
Further, the company was also accused for not screening its sales calls for these add-on policies and there were no effective mechanism to ensure customers had been provided with ample and balanced information.
Swinton agreed to settle the FCA charges at an early stage and availed a discount of 30%, otherwise the fine would have touched to £10.54m.